The inclusion of contractual terms is subject to a test (in the courts) so that they are used fairly. In such cases, fairness can generally be achieved by redrafting the term more precisely so that it reflects the practice and current intentions of the supplier. These are generally done if the terms do not read right and do not fully express the interests of the parties or they frustrate the purpose of the terms to the detriment of the contracting parties.
Schedule 2 to the Regulations illustrates the meaning of ‘unfairness’ by listing some types of terms which may be regarded as unfair. The 17 groups of terms covered in Part II correspond to the 17 headings used in paragraph 1 of Schedule 2. The terms listed are not necessarily unfair – it is a grey area not a so-called blacklist. That said terms are under suspicion of unfairness if they either have the same purpose or can produce the same result as terms in the ‘grey’ list. They do not have to have the same form or mechanism.
All the illustrative terms listed in Schedule 2 have the object or effect of altering the position which would exist under the ordinary rules of contract and the general law if the contract were silent. They either protect the supplier from certain sorts of claims ‘in law’, which the consumer might otherwise make or give rights against the consumer that the supplier would not otherwise enjoy.
The OFT’s/court’s starting point in assessing the fairness of a term is, therefore, normally to ask what would be the position for the timeshare consumer if it did not appear in the contract. The principle of freedom of contract can no longer be said to justify using standard terms to take away protection consumers would otherwise enjoy.
The Regulations recognise that contractual small print is in no real sense freely agreed with consumers. Where a term changes the normal position seen by the law, as striking a “fair balance” it is regarded with inquisitive suspicion.
Transparency is also fundamental to fairness. Regulation 7 says that standard terms must use plain and intelligible language. Taking account of the Directive the Regulations implement, this needs to be seen as part of a wider requirement of putting the timeshare consumer into a position where he can make a reasonably informed choice. Thus even though a term would be clear to a lawyer, we will probably conclude that it has the potential for unfairness if it is likely to be unintelligible to normal timeshare consumers and thereby cause detriment, or if it is misleading (in which case its use may also be actionable as an unfair commercial practice).
Moreover, unfair contract terms in guidance 11, timeshare consumers need adequate time to read terms before becoming bound by them, especially lengthy or complex terms, and this can also be a factor in assessing fairness.
Examples of Unfair Terms
One point needs to be particularly stressed, any revised terms should not be seen ‘cleared’ by the OFT for general use. The revisions reflect our assessment of what a court would be likely to consider fair in the particular contract under consideration. Their view and that of others are not binding on the courts, or upon other enforcers, nor does it fetter the freedom of the OFT itself to take future enforcement action in the interests of consumers. They have a statutory duty to consider complaints about any terms brought to our attention, including any terms that have been revised as a result of our actions.
Last modified: 15th April 2020